Global JV and Investment Platform Structures Grow More Complex
The rise of separately managed accounts investing alongside traditional funds is creating multi-layered arrangements that demand greater attention to regulatory characterization, tax substance, and governance.
Investors are increasingly using complex, multi-level joint venture (JV) and platform structures to deploy capital across jurisdictions and asset classes. A key driver of this complexity is the rise of separately managed accounts (SMAs) investing alongside traditional fund vehicles, creating parallel structures that access a single underlying asset pool. This trend, particularly prevalent in infrastructure M&A, requires careful upfront planning to mitigate significant regulatory, tax, and governance risks.
Sophisticated counsel should be aware that these arrangements face heightened scrutiny. Regulators may question whether the structure is a lightly-regulated JV or a more heavily regulated fund, potentially triggering requirements like AIFMD in Europe. Tax authorities globally are also increasingly focused on the substance of these structures, examining the location of central management and control to combat tax avoidance. To preserve value, clients must invest more time in structuring at the term-sheet stage and implement robust, consistent governance frameworks that can withstand scrutiny from investors, lenders, and tax authorities.